EXHIBIT A
CERAGON NETWORKS®REPORTS FOURTH QUARTER AND
YEAR-END 2006 FINANCIAL RESULTS
Revenues and Non-GAAP Profitability Set New All-time Records
TEL AVIV, Israel, February 5, 2007 – Ceragon Networks Ltd. (NASDAQ and TASE: CRNT), www.ceragon.com, a leading provider of high-capacity wireless backhaul solutions, today reported results for the fourth quarter and year which ended December 31, 2006.
Revenues for the fourth quarter of 2006 were $32.9 million, up 63.8% from $20.1 million for the fourth quarter of 2005 and 8% from $30.5 million in the third quarter of 2006.
Net loss on a GAAP basis for the fourth quarter of 2006 was $8.1 million, or $0.30 basic and diluted net loss per share, including a charge of $10.4 million as a result of an agreement to conclude the participation in the grant program of the Office of the Chief Scientist which was announced in January 4, 2007.
Net income for the fourth quarter on a non-GAAP basis, excluding equity-based compensation and the one-time charge was $2.7 million, or $0.09 per diluted share, compared to non-GAAP net income of $1.0 million, or $0.04 per basic and diluted share in the fourth quarter of 2005. Expense related to equity-based compensation in the fourth quarter of 2006 was $370,000. A reconciliation table of GAAP and non-GAAP results is provided below.
Gross margin on a GAAP basis in the fourth quarter of 2006 was 4.5% of revenues. On a non-GAAP basis gross margin for the fourth quarter of 2006 was 36.3% of revenues.
Revenues for the full year of 2006 were $108.4 million, up 46.9% from $73.8 million in 2005. Net loss on a GAAP basis for 2006 was $5.5 million or $0.20 basic and diluted net loss per share. On a non-GAAP basis, net income for 2006 was $6.7 million, or $0.24 per diluted share compared to a non-GAAP net income of $3.8 million, or $0.14 per diluted share for 2005.
The Company ended the quarter with cash and liquid investments of $29.5 million.
“We are pleased with the strong Q4 performance,” said Ira Palti, President and CEO of Ceragon. “Revenue growth exceeded our expectations, owing to continued strength from our OEM channels and several large government deals.”
“Looking at 2006 as a whole, we achieved all of our major objectives including completing the transition to our new FibeAire 1500P product family, leading the migration to IP backhaul with the fastest data rates in the market, significantly ramping up our production while moving to completely outsourced manufacturing and building our OEM relationships to augment our direct business,” said Palti.
A conference call discussing Ceragon’s results for the fourth quarter and full year of 2006, business conditions, and outlook, will take place today, February 5, 2007, at 9:00 a.m. (EST). Investors can join the Company’s teleconference by calling (719) 457-2728 or (800) 475-3716 and referencing confirmation number 4196437 at 8:50 a.m. EDT
Investors are also invited to listen to the call live via the Internet by accessing Ceragon Networks’ website at the investors’ page: http://www.ceragon.com/site/Investor_events.asp, selecting the webcast link, and following the registration instructions.
If you are unable to join us live, the replay numbers are: (719) 457-0820 or (888)-203-1112. Access code is: 4196437. A replay of both the call and the webcast link will be accessible through February 15, 2007.
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About Ceragon Networks Ltd.
Ceragon Networks Ltd. (NASDAQ and TASE: CRNT) is a leading provider of high-capacity wireless backhaul solutions for cellular and fixed wireless operators, enterprises and government organizations. Ceragon’s modular FibeAir® product family is recognized as the gold standard for backhaul transmission and is also one of the top solutions chosen by cellular operators for SONET/SDH rings. A scalable, future-proof solution for wireless transport of broadband services, FibeAir operates across multiple frequencies for IP and SONET/SDH protocols, supporting the emerging needs of next-generation networks that are evolving to all-IP based services, including triple-play. It leads the market in IP backhaul, offering a unique, native IP solution that provides the efficient, robust connectivity required for WiFi, WiMAX and converged networks. Ceragon supports its growing base of more than 180 customers in 70 countries by operating an extensive sales network comprising 17 offices and numerous partners located around the world. More information is available at www.ceragon.com.
Ceragon Networks®, CeraView®, FibeAir® and the FibeAir®design mark are registered trademarks of Ceragon Networks Ltd., and Ceragon™, PolyView™, ConfigAir™, CeraMon™, EtherAir™, QuickAir™, QuickAir Partner Program™, QuickAir Partner Certification Program™, QuickAir Partner Zone™, EncryptAir™ and Microwave Fiber™ are trademarks of Ceragon Networks Ltd.
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Ceragon Reports Fourth Quarter and Fiscal Year 2006 Results
CONSOLIDATED STATEMENTS OF OPERATIONS
U.S. dollars in thousands, except share and per share data
Three months ended December 31, | Year ended December 31, | |||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2006 | 2005* | 2006 | 2005* | |||||||||||
Revenues | $ | 32,945 | $ | 20,110 | $ | 108,415 | $ | 73,777 | ||||||
Cost of revenues (including one time | ||||||||||||||
charges) (**) | 31,462 | 19,984 | 80,776 | 52,487 | ||||||||||
Gross profit | 1,483 | 126 | 27,639 | 21,290 | ||||||||||
Operating expenses: | ||||||||||||||
Research and development | 3,486 | 2,687 | 13,336 | 10,713 | ||||||||||
Less: grants and participations | - | 413 | 1,543 | 1,752 | ||||||||||
Research and development, net | 3,486 | 2,274 | 11,793 | 8,961 | ||||||||||
Selling and marketing | 5,108 | 3,601 | 17,420 | 13,629 | ||||||||||
General and administrative | 1,481 | 895 | 5,217 | 3,200 | ||||||||||
Total operating expenses | 10,075 | 6,670 | 34,430 | 25,790 | ||||||||||
Operating loss | (8,592 | ) | (6,644 | ) | (6,791 | ) | (4,500 | ) | ||||||
Financial income, net | 415 | 188 | 1,284 | 607 | ||||||||||
Other Income | 48 | 7 | 47 | 66 | ||||||||||
Net loss | $ | (8,129 | ) | $ | (6,449 | ) | $ | (5,460 | ) | $ | (3,827 | ) | ||
Basic and diluted net loss per share | $ | (0.30 | ) | $ | (0.25 | ) | $ | (0.20 | ) | $ | (0.15 | ) | ||
Weighted average number of shares used | ||||||||||||||
in computing basic and diluted net | ||||||||||||||
earnings per share | 27,105,749 | 26,313,628 | 26,728,053 | 26,137,121 | ||||||||||
* The amortization of deferred stock compensation was reclassified in the relevant expense lines.
** including $7,082 related to a write-off of inventories and $390 related to long-term receivables for 2005 and $10,444 related to the termination of the agreement with the Chief Scientist grant program for 2006.
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Ceragon Reports Fourth Quarter and Fiscal Year 2006 Results
CONSOLIDATED BALANCE SHEETS
U.S. dollars in thousands, except share and per share data
December 31, 2006 | December 31, 2005 | |||||||
---|---|---|---|---|---|---|---|---|
ASSETS | ||||||||
CURRENT ASSETS: | ||||||||
Cash and cash equivalents | $ | 10,170 | $ | 10,315 | ||||
Short-term bank deposits | 5,364 | 3,917 | ||||||
Marketable securities | 6,578 | 5,654 | ||||||
Trade receivables, net | 27,433 | 15,079 | ||||||
Other accounts receivable and prepaid expenses | 11,092 | 5,141 | ||||||
Inventories | 23,144 | 16,144 | ||||||
Total current assets | 83,781 | 56,250 | ||||||
LONG-TERM INVESTMENTS: | ||||||||
Long-term bank deposits | 2,873 | 5,322 | ||||||
Long-term marketable securities | 4,500 | 7,814 | ||||||
Severance pay funds | 2,537 | 2,142 | ||||||
Total long-term investments | 9,910 | 15,278 | ||||||
PROPERTY AND EQUIPMENT, NET | 2,660 | 2,464 | ||||||
Total assets | $ | 96,351 | $ | 73,992 | ||||
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||
CURRENT LIABILITIES: | ||||||||
Trade payables | $ | 22,147 | $ | 12,382 | ||||
Deferred revenues | 3,739 | 3,456 | ||||||
Other accounts payable and accrued expenses | 10,627 | 5,541 | ||||||
Total current liabilities | $ | 36,513 | $ | 21,379 | ||||
LONG-TERM LIABILITIES | ||||||||
Accrued severance pay | 4,352 | 3,424 | ||||||
Other payables | 7,925 | - | ||||||
Total long-term liabilities | $ | 12,277 | $ | 3,424 | ||||
SHAREHOLDERS' EQUITY: | ||||||||
Share capital: | ||||||||
Ordinary shares of NIS 0.01 par value: Authorized: 40,000,000 shares as of | ||||||||
December 31, 2005 and December 31, 2006; Issued and outstanding: | ||||||||
26,335,003 shares and 27,436,090 shares as of December 31, 2005 and | ||||||||
December 31, 2006, respectively | 68 | 65 | ||||||
Additional paid-in capital | 181,137 | 177,338 | ||||||
Deferred stock-based compensation | - | (26 | ) | |||||
Other comprehensive Income | 64 | 51 | ||||||
Accumulated deficits | (133,708 | ) | (128,239 | ) | ||||
Total shareholders' equity | 47,561 | 49,189 | ||||||
Total liabilities and shareholders' equity | $ | 96,351 | $ | 73,992 | ||||
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Ceragon Reports Fourth Quarter and Fiscal Year 2006 Results
RECONCILIATION OF NON-GAAP FINANCIAL RESULTS
U.S. dollars in thousands, except share and per share data
Quarter Ended December 31, 2006 | Quarter ended December 31, 2005 | |||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
GAAP (as reported) | Adjustments (*) | Non-GAAP | Non-GAAP (**) | |||||||||||
Revenues | $ | 32,945 | $ | 32,945 | $ | 20,110 | ||||||||
Cost of revenues | 31,462 | 10,444 | 20,987 | 12,512 | ||||||||||
31 | ||||||||||||||
Gross profit | 1,483 | 11,958 | 7,598 | |||||||||||
Operating expenses: | ||||||||||||||
Research and development | 3,486 | 3,417 | 2,687 | |||||||||||
Less: grants and participations | - | - | 413 | |||||||||||
Research and development, net | 3,486 | 69 | 3,417 | 2,274 | ||||||||||
Selling and marketing | 5,108 | 130 | 4,978 | 3,601 | ||||||||||
General and administrative | 1,481 | 140 | 1,341 | 891 | ||||||||||
Total operating expenses | $ | 10,075 | $ | 9,736 | $ | 6,766 | ||||||||
Operating profit (loss) | (8,592 | ) | 2,222 | 832 | ||||||||||
Financial income, net | 415 | 415 | 188 | |||||||||||
Other Income | 48 | 48 | 7 | |||||||||||
Net income (loss) | $ | (8,129 | ) | $ | 2,685 | $ | 1,027 | |||||||
Basic net earnings (loss) per share | $ | (0.30 | ) | $ | 0.10 | $ | 0.04 | |||||||
Diluted net earnings (loss) per share | $ | (0.30 | ) | $ | 0.09 | $ | 0.04 | |||||||
Weighted average number of shares used in | ||||||||||||||
computing basic net earnings per share | 27,105,749 | 27,105,749 | 26,313,628 | |||||||||||
Weighted average number of shares used in | ||||||||||||||
computing diluted net earnings per share | 27,105,749 | 28,814,291 | 27,400,756 | |||||||||||
Total adjustments | $ | 10,814 | $ | 7,476 |
(*) Adjustments related to equity based compensation expenses according to SFAS 123 (R) and to termination of the participation in the Chief Scientist grant program
(**) Adjustments related to equity based compensation expenses according to APB 25 and write down of inventory
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Ceragon Reports Fourth Quarter and Fiscal Year 2006 Results
RECONCILIATION OF NON-GAAP FINANCIAL RESULTS
U.S. dollars in thousands, except share and per share data
Year ended December 31, 2006 | Year ended December 31, 2005 | |||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
GAAP (as reported) | Adjustments (*) | Non-GAAP | Non-GAAP (**) | |||||||||||
Revenues | $ | 108,415 | $ | 108,415 | $ | 73,777 | ||||||||
Cost of revenues | 80,776 | 10,444 | 70,168 | 45,013 | ||||||||||
164 | ||||||||||||||
Gross profit | 27,639 | 38,247 | 28,764 | |||||||||||
Operating expenses: | ||||||||||||||
Research and development | 13,336 | 13,026 | 10,701 | |||||||||||
Less: grants and participations | 1,543 | 1,543 | 1,752 | |||||||||||
Research and development, net | 11,793 | 310 | 11,483 | 8,949 | ||||||||||
Selling and marketing | 17,420 | 471 | 16,949 | 13,613 | ||||||||||
General and administrative | 5,217 | 767 | 4,450 | 3,068 | ||||||||||
Total operating expenses | $ | 34,430 | $ | 32,882 | $ | 25,630 | ||||||||
Operating profit (loss) | (6,791 | ) | 5,365 | 3,134 | ||||||||||
Financial income, net | 1,284 | 1,284 | 607 | |||||||||||
Other Income | 47 | 47 | 66 | |||||||||||
Net income (loss) | $ | (5,460 | ) | $ | 6,696 | $ | 3,807 | |||||||
Basic net earnings (loss) per share | $ | (0.20 | ) | $ | 0.25 | $ | 0.15 | |||||||
Diluted net earnings (loss) per share | $ | (0.20 | ) | $ | 0.24 | $ | 0.14 | |||||||
Weighted average number of shares used in | ||||||||||||||
computing basic net earnings per share | 26,728,053 | 26,728,053 | 26,137,121 | |||||||||||
Weighted average number of shares used in | ||||||||||||||
computing diluted net earnings per share | 26,728,053 | 28,336,942 | 26,590,873 | |||||||||||
Total adjustments | $ | 12,156 | $ | 7,634 |
(*) Adjustments related to equity based compensation expenses according to SFAS 123 (R) and to termination of the participation in the Chief Scientist grant program
(**) Adjustments related to equity based compensation expenses according to APB 25 and to write off of inventory
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Ceragon Reports Fourth Quarter and Fiscal Year 2006 Results
This press release may contain statements concerning Ceragon’s future prospects that are “forward-looking statements” under the Private Securities Litigation Reform Act of 1995. These statements are based on current expectations and projections that involve a number of risks and uncertainties. There can be no assurance that future results will be achieved, and actual results could differ materially from forecasts and estimates. Important factors that could cause actual results to differ materially from forecasts and estimates include: Ceragon’s limited operating history and history of losses; Ceragon’s dependence on a limited number of key customers, independent manufacturers and suppliers; and the demand for Ceragon’s products and technology. These risks and uncertainties, as well as others, are discussed in greater detail in Ceragon’s Annual Report on Form 20-F and Ceragon’s other filings with the Securities and Exchange Commission. Forward-looking statements speak only as of the date on which they are made, and Ceragon undertakes no commitment to revise or update any forward-looking statement in order to reflect events or circumstances after the date any such statement is made.
Contacts:
Vered Shaked
Investor Relations Manager
Ceragon Networks Ltd.
+972-3-645-5513
vereds@ceragon.com
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